The relationship between initial public offerings (IPO) and cryptocurrencies remains for most investors an open question. Yet, the combination of these risky investments has the potential to deliver a blockbuster IPO.
Last month, San Francisco-based tech unicorn Coinbase — the top name in the crypto ecosystem — announced that it was working with the U.S. Securities and Exchange Commission (SEC) to take the cryptoasset-exchange public. The IPO excitement, which comes in the midst of a surge in crypto prices, particularly that of Bitcoin’s (BTC) with its parabolic rise to nearly $42K per digital coin, is likely to thrust the startup further into the mainstream while at the same time increase demand for its IPO among retail and institutional investors.
As the most valuable American crypto company, Coinbase — which was valued at $8 billion more than two years ago and certainly worth more now — is said to be highly profitable, though its balance sheet hasn’t yet been made public. Most of its profits come from charging fees on every transaction its 35 million verified users make. The company also charges a fee of $0.99 to $2.99 on transactions up to $200. On top of that, Coinbase offers more than 30 crypto currencies as well as crypto-custodial solution for its users who have $25 billion in crypto assets on the platform. Furthermore, the exchange’s total volume traded exceeds $320 billion.
It should be noted that Coinbase, which unlike many of its competitors, has never been hacked, is well-funded and from some of the biggest-name VCs. The list includes the likes of Union Square Ventures, Tiger Global Management and Andreessen Horowitz ; venture capital firms that vaulted Coinbase into the unicorn club.
Coinbase was launched in May of 2013 by serial tech entrepreneur Shakil Khan. Three years later Khan sold his startup for just $500,000 to Barry Silbert’s Digital Currency Group.
Whatever investors think Coinbase is worth as it prepares its IPO or direct listing, many crypto investors, including those whose ultimate vision is that of creating a new, “open financial system” will no doubt want to buy not only one of this year’s biggest IPOs but also a listing that would represent a dramatic change in the perception of crypto currencies’ legitimacy.